Compensation trade refers to a trade method in which the buyer imports machinery, equipment, technology, and certain raw materials from foreign manufacturers on the basis of credit, and agrees to repay it with products or services within a certain period of time. .
For countries that lack technology and foreign exchange, this trade method can use foreign capital to purchase advanced technology and equipment to accelerate the country's economic development and enhance export capabilities.
Compensation trade, also known as product resale, means that one party to the transaction imports equipment and technology based on the credit provided by the other party, and then pays the price and interest of the imported equipment and technology in installments with the products produced by the equipment and technology. .
Extended information:
Type:
According to the different objects of compensation, compensation trade can be roughly divided into three categories:
1. Direct Product Compensation. That is, the two parties agree in the agreement that the equipment supplier commits to the equipment importer to purchase a certain quantity or amount of products directly produced by the equipment.
The limitation of this approach is that it requires that the direct products produced and their quality must be what the other party needs, or be marketable in the international market, otherwise it will not be easily accepted by the other party.
2. Compensation for other products. When the equipment being traded does not itself produce material products, or the direct products produced by the equipment are not needed by the other party or are not easy to sell in the international market, the two parties can negotiate based on their needs and possibilities to buy back other products instead.
3. Labor compensation. This practice is common in small and medium-sized compensation trade combined with processing of supplied materials or assembly of supplied parts.
The specific method is: According to the agreement, the two parties often purchase the required technology and equipment on their behalf, and the payment for the goods is advanced by the other party. After we process and produce according to the other party's requirements, we will deduct the amount owed in installments from the labor fees receivable.
Basic features:
Compared with general trade methods, compensation trade has the following two basic features:
1. Credit is indispensable for carrying out compensation trade. prerequisites.
2. The equipment supplier must also promise to repurchase the equipment importer’s products or services, which is a necessary condition for compensatory trade.
It should be clear that the import of equipment on the basis of credit does not necessarily constitute compensatory trade. Compensatory trade not only requires the equipment supplier to provide credit, but also promises to repurchase the other party's products or services in order to Let the other party use the proceeds to repay the loan.
These two conditions must be met at the same time, and one is indispensable. In addition, to engage in compensation trade, both parties must sign a compensation trade agreement.
The role of compensation trade in equipment technology importers:
Enterprises introducing equipment technology through compensation trade can solve the problem of lack of funds for equipment updates and technological transformation, so that products can be Upgrading and upgrading enhance market competitiveness (including international and domestic markets). ?
The equipment technology importer sells the products back, and while compensating for the price of the equipment technology, it also makes use of the equipment exporter's foreign sales channels to allow the products to enter foreign markets and use imported equipment technology to drive product sales. Exporting, known as the "import and export" method, is a major feature of contemporary small and medium-sized compensation trade.
The equipment technology introduced through compensation trade is often not very advanced, and is even second-hand equipment. However, if the products can be transported and sold, the market prospects are good, and the equipment prices are reasonable, it will still be beneficial to developing countries to increase product exports, expand domestic employment opportunities, and improve regional economic development levels.
The role of compensation trade in technology exporters:
Exporters expand the export of equipment and technology on the basis of providing credit. Out of the need to transfer industries, exporters transfer industries to developing countries through compensatory trade. They not only obtain the price of transferred equipment and technology, but also obtain profits from the sales of resold goods. It can be said that it kills two birds with one stone.
Baidu Encyclopedia-Compensation Trade